1. Field of the Invention
The field is retirement income generally, and specifically, a system and method for benchmarking for a sustainable and real (after-inflation) retirement income for a participant's remaining lifetime.
2. Description of the Related Art
A large and looming issue is the need to convert over $7 trillion of defined contribution (DC) and IRA-type assets in the United States into lifetime retirement income: income that maintains its purchasing power throughout a retirement that can last only a few years or as long as thirty or more years. This assets-to-income process is the subject of this description.
To accomplish this, however, there must first be an initial and broader discussion of retirement income, especially the reality that there is no risk-free retirement income scheme. All retirement-income schemes, from Social Security to a bank savings account, contain risks and these risks are material and they vary only in degree. The reality of a no-risk-free pension scheme is very important and often underappreciated.
Sustainable and real (after-inflation) retirement income is a major goal of work. This work produces a wide range of income sources and individual income levels, reflecting the overall wealth and the economic diversity in America.
From this work, almost all Americans will draw retirement income from three financial sources. First there is Social Security. Next there are defined-benefit (DB) pension schemes, and personal savings that are mostly held in defined-contribution plans and IRAs. There is also retirement income derived from working during “retirement.” Workers who are not in Social Security are covered by the Railroad Retirement Board or Teachers Retirement Systems in thirteen states and most government employees who do not participate in Social Security. For the purposes of this description, one can group view all non-DB, DC, and IRA retirement plans as “Social Security-like” in that they are promises of a government entity.